Discipline Is the Difference Between Broke and Wealthy

27:55Dave Ramsey:Do you have any money saved? Yes. How much? So I have liquid, like I have a cash of about$7 ,000. Okay. So you could write the check and sell the car. You could write the check and sell the car and then finish up baby step three is all you would have lacked. And then if you wanted to do the luxurious daycare, you could. But we would tell you to do that at baby steps four, five, and six. And that's when you move from intensity to intentionality. And, you know, because it's not the only way the child is cared for adequately. and so um and that's what you're you know that first thing is safety and comfort you know for the baby and make sure because first time mom second time mom third time mom all dad and all dads you know we none of us want our child in a situation that's not cool yeah well and I would say too Angel be thinking about um I hate to say priorities because that makes it sound bad it's not a bad thing if you keep the car and just pay it off that's fine but also you're trading what you kind of want as a mom for that car for a car you know what i mean so if you really want that better daycare sell your car and you don't have to worry about it write a check out of the 7 000 cover the difference yeah get you a beater and um then you can do whatever you want whatever you want to do you got to get the emergency fund built but i think you could do that anyway with the two yeah a couple months yep yeah so i don't think that's going to kill you but you know but you're right Rachel there's uh we've even seen situations where we've got an SUV payment that's massive uh to haul kids around and the mom's like I want to I want to quit and go home and be a full-time mom and you go okay well how much are you off and you do all the math and it comes out about the SUV payment yeah so like you're working to buy an SUV to haul kids around and you're not home.

29:54Dave Ramsey:And so, yeah, sell the SUV. That's, you know, we get that, we've done that math. Well, it starts to get a good picture of what your stuff actually means to you because you think even, even people in Baby Step, you know, too, and they're working hard, they're working extra hours, they're working weekends, they're not having a life to get out of debt, where some people, you know, you have an asset sitting there and that could save you four months of overtime. So sell the, you know what I mean? Like there's like credit card debt, you have no option. You've got to pay it off. Your student loans, you've got to pay it off.

30:25But when it comes to the car specifically, it is the one thing. And we're not mad if you keep it and work hard and pay it off. You can do it within 12 months.

30:33Dave Ramsey:She said it's the biggest mistake they made. She doesn't like it. It's the biggest mistake they ever made, she said. Yeah, her car. Yeah. An asset sitting there and it's taking time away from my family. The ability to have margin in my budget. You just kind of start to realize this stuff is costing us. And man, selling it, that's a lot of freedom.

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32:32Dave Ramsey:William is with us in Charlotte, North Carolina. Hi, William. How are you? Hello, Dave. It's so wonderful to finally get the opportunity to talk to you. I will get right into my question, but you have really changed my life. Well, you changed it. I'm proud of you. How can we help? Well, thank you so much. My question is for people who are established financially and looking to invest their money in a safe but morally appropriate way. Specifically, my question is, can the average investor work towards putting our earnings into individual companies that we like and understand? I ask this because when we give all of our money to large investment groups, we lose control of the equity and give massive amounts of voting rights to groups that don't always have concrete or even good moral values.

33:25An example being Wall Street madness and corruption.

33:29Dave Ramsey:Is this possible and how so? It's an excellent question. Thank you. There's a lot that goes into this. if you were to invest in any company as a single stock, a publicly traded company, you have absolutely no control what they do. Okay? Yes, definitely. The only thing you could make, you could de-invest. I mean, you could look up and go, okay, that company's doing X or Y that I don't agree with morally, and so I'm going to sell the stock off. Okay? Yes. So the problem is that a portfolio of single stocks underperforms a good portfolio of mutual funds dramatically. Mutual funds in general can fall into the category that you're talking about where the voting rights are gone.

34:25Dave Ramsey:And someone else like a BlackRock or whatever, they're holding sway over some of these companies or some of these mutual funds. And so there and even some of the boards of those companies get infected with that stuff. So your observation is correct. My friend Vivek Remsworthy wrote a book before he got into politics called Woke Capitalism, where he got into how the boards were infected even with some of these things. So it's a very cool philosophical discussion and really and a good ethical question in general that you're asking. so um the the if you are there are some mutual funds out there that pledge to only invest in stocks that align with x or y value okay so for instance you could um there are some that are like animal rights they won't invest in any company that the dolphins are getting caught in the tuna nets okay okay so they're worried about the the animal rights and so they refuse to do that that's actually one that i had brought up one time it actually happened and so that that you can say i'm an animal rights advocate and i don't dave explaining dolphins well i mean it actually came up i actually was not on my bingo code today i didn't think that was happening today but yeah so um but they do they get caught in there and they die not good And so that's what happens.

35:57Dave Ramsey:I don't like that. And so anyway, the other side of that, of course, is the, you know, from a moral or ethical, from a person of faith, if you are a person like a Christian, like Rachel and I and Sharon and I are. And so, you know, I don't want someone investing in something that's completely or running their company in a way that's completely contrary to what I believe biblical values are. And I don't want to put money into that. So what about retirement investing then? Yeah, yeah. So then there's one company down in Atlanta that actually has a pretty good track record. It's called the Timothy Fund, if you're worried about on the Christian ethics side.

36:37Dave Ramsey:And the Timothy Fund does their best to comb through these companies before they put them in the portfolio that they line up ethically with that. And it has not performed poorly. It's performed about like other mutual funds, roughly. It's not substantially better, not substantially worse. So that's there. And we've actually told people about the Timothy Fund for 20 years or 25 years. I met those guys a long time ago when they were putting that thing together. And it has worked out. That's one part of the equation. Oh, sorry. My bad. No, that's fine. Go ahead. What's your question? Do you think that the Timothy Fund would also, on average, outperform individual stock investments?

37:20Yes.

37:21Dave Ramsey:Okay. Because all the research says that when you go buy five stocks, you suck at part of it. You're just not good at it. And these guys that do the analysis on this come to work in a car longer than your house. I mean, it's ridiculous. And they're very, very specialized and nuanced. They'll have one guy that does nothing but study the automotive industry 24-7. And you and I can't keep up with that. I can't do that level of detailed research. I would spend all my time with my nose in my computer. Heck with it. No, thank you. Now, all of that being said, here's the other thing. When you buy a stock from a company or you buy a stock in a company, like you buy a share of Home Depot, you realize the money does not go to Home Depot.

38:16Dave Ramsey:it goes to the guy on the other side of the equation that's the seller of the stock yes okay so when you buy a used chevrolet from me chevrolet doesn't get any of the money and so if you're pissed at chevrolet about something they're not even affected by the transaction now if you buy a nike shirt and you don't like what nike stands for then you gave nike you the money that's different but when you're buying a share of stock almost always you're buying it from another entity that has nothing to do with the company unless it's treasury stock issue so it's really not there and it's a slippery slope to get into studying and trying to figure out who's doing things that are wrong i mean then you can't go to the you can't bank with that bank because they support planned parenthood and you can't go to that uh grocery store because right down the aisle there is some pornography and you can't and there's you know everywhere you go you're interacting right everywhere you go you're interacting with the world somewhere and and they're always doing something that's mischievous at a minimum and so you know you've got to decide where i'm going to draw the line on this and go okay if somebody stands for something that i that i oppose and it's their whole thing i want to stay away from them but if there's a corner of the market where I buy gas that sells penthouse I probably don't know it unless I'm in there looking for a penthouse right what's that a playboy magazine okay and so it's like an 80s reference it's an 80s reference okay yeah they're probably they're probably out of business okay so I don't even know but anyway um I got no idea but uh that's how but anyway if there's okay if If there's something you vehemently disagree with and it's in the corner of the market.

40:05Right. Okay. I hear you. I hear you. You don't believe in smoking weed, but they sell wrappers. I'm with you. Well, it's just like you're going to boycott everything. You're never going to have a Starbucks coffee. You're never going to have an Apple phone. I mean, like, yes.

40:17Dave Ramsey:There's always something to be pissed about. That's right. That's right. It's a very, very slippery thing. So I have made the decision if something's in my face, I'm not going to do it. But I don't think I can do enough investigation or spend enough of my time to control to have 1 ,000 % of all my dollars pure. Right, right. And I think – I really don't think God's mad at me about that. And he's asking me to manage his money, by the way. I'm a steward. Right. And so – now, if you're Muslim, you're not allowed to do any of it anyway by the Koran. You can't put a dime in those kinds of things, period.

40:54Dave Ramsey:You don't have – it's not an option. And so ethical question over. You cannot do, you cannot engage in things like that, period. And you can't invite, you can't even put money in a bank because you can't get usury to receive interest. And the Quran, if you're strictly following the Quran, you're not allowed to draw interest. And so obviously there's some Muslims that don't strictly follow the Quran. Like there's some Christians that don't as strictly follow the biblical interpretation of something. And so, but, you know, so you've just got to look at things, but it is, I love your question because you're thinking and saying, my faith matters to me, my values matter to me, and I don't want to support things that are bad from a worldview standpoint.

41:39Dave Ramsey:That are against, yeah. I think that's wise. Yes, but I think to your point, when it's all being exchanged, again, it's not going to that company. Yeah. You are making money off that company when that company prospers. Sure. But that's part of it. It's a hard thing to figure out. Nice question. Thank you, sir.

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43:31Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union Studios. Kevin is in Lincoln, Nebraska. Hi, Kevin. How are you? I'm doing well. How are you? Better than I deserve. What's up? Well, kind of wondering. My wife and I became debt-free last year, paid off the house, got our emergency fund. Wow. Good for you. Thank you. Thank you. I owe it to you guys. I wish I could say I did it strictly Ramsey, but it was more Dave-ish along the way. We probably could have got it done a lot faster had we been more strict. But then in about the last year of working on debt, I kind of started doing some soul searching of wanting to do something a little more personal rewarding as far as a career than what I was doing.

44:20Dave Ramsey:And a few months after we became debt-free, I became a personal trainer and reduced my income by probably anywhere from 66 to 75%. And now, I mean, we're getting by, but that's about it. We don't have a whole lot of extra at the end of the month. And now we've got, you know, things like house upkeep and wanting to travel, and other financial goals that we'd like to achieve. What were you doing before and what were you making? I was a cell phone tower construction project manager, making about$105 ,000 a year. So you're only making like$25 ,000 or$30 ,000 as a trainer? Yeah, I take home about$1 ,000 every two weeks.

45:08I know I'm fairly new in the industry and if I work hard I could you know make more um but I just I'm 50 years old I don't feel like I've got the time to to really uh put in the work and and and the sales aspect of it I'm not the greatest um I almost you know I'm not I'm curious Kevin what the conversations were so you guys paid off the house everything you're like wow we don't really need a lot of money because we don't have a ton of bills. And so I'm just curious how you got from where you were to this. You just love training and you're like, let me just do this and see what happens. Yeah. For the last, I don't know, maybe five years of working in the cell phone tower industry, I really started feeling like I was doing the devil's work, you know, with where cell phones and social media have gotten the world today.

45:59Dave Ramsey:I don't feel like it's net positive and I just was really feeling like I wanted to do something that was more rewarding, something that helps people. I've always been a little bit of a gym rat and I've heard other people say that I should be a trainer and so I decided to give it a shot and my wife was supportive. I mean, she saw how stressed out I was with the cell phone. Let's establish this, okay? You gave Give it a shot. The way you're doing it today is not working. That's why you called. Yeah. So something has to change. Either the way you're running your personal trainer business has to change, and you're going to have to make it profitable and triple your income, which you should be able to do, by the way.

46:50Dave Ramsey:And you're going to have to get pretty aggressive about it. and not in a mean or a pushy way or anything like that, but you're going to have to get excited about making a stinking profit, or you need to do something else. And I don't think you have to go back to cell phone business, by the way. A project manager that can manage the building of a cell phone tower can manage a lot of different kinds of projects. You could easily get in the home building business as a general contractor. or you could easily get into other things, just the project management science, the science of project management.

47:28Dave Ramsey:It's wide open. We've got people all through our organization that manage projects here. It's their title. It's their function. And they're not doing the devil's work. So there's a lot of different ways to apply your experience if you don't want to be in business for yourself. But if you want to be in business for yourself, you're at the treadmill stage, the beginning stage of this, and you're going to have to grow this business, and you're going to have to commit to doing the parts of the business you don't enjoy as much as the other parts in order to be able to stay in the business. Right. Yeah.

48:08Dave Ramsey:So if I enjoy writing books and speaking on the radio, but I'm not making a lot, you know, and the only way I can do that is I have to do the accounting, and I have to do the marketing, which I don't enjoy as much. And I don't enjoy accounting. I don't mind marketing. But I'm saying if there's parts of running Ramsey in the old days that I don't like, I've got to do them to be able to do the parts that I do like. And that's what you're not doing. Yeah. You've kind of took your foot off the gas and you're just coasting along, helping people. You're like a gym rat that gets paid sometimes. pretty much yeah i i kind of figure i'm spending about 48 hours a week at the gym and getting paid for about 30 of it and about a third of that is minimum wage yeah you're not making a dollar an hour yeah yeah yeah so you you got to change your business model and embrace the discomfort portions of the business and if you want to i mean he if you want to if you if otherwise you need to go get a job yeah yeah yeah you know because you've established by the way you described it is i hey i wanted to do this i did it it's not working for my family it's not really not working for me i'm not it's not as satisfying as the lack of money yeah yeah i mean that's that's that's it right there it's it's not as satisfying as uh having that extra money and the freedom that comes with that yeah i want to be able to take a cruise with my wife i'm stinking debt free you know and I'm not even making a dollar an hour over here at the gym so I get it I get why you did it I'm not shaming you for that but you you need to establish okay here's what has to be true in order for me to stay in this business I don't want to do that okay then you're not staying in the business and I think it takes a lot to keep a small business running you have to love it and believe in it and if you don't you sound a little bit on the fence Kevin just from your time I mean And you may just, I don't know, what I'm picking up, you might be better off.

50:11I mean, honestly, go work for someone for 10 years until you're 60. Make a good living and call it a day.

50:17Dave Ramsey:There's a lot of stuff you could do working on your own as a project manager. If you looked at this as a project, you know, that's fine. So I'm going to send you a couple books. I'm going to send you Desired Future by Henry Cloud, which is you need to say out loud what my desired future is. And then immediately he says to ask yourself what must be true that's not true today. So my desired future is if I'm going to stay in this, I need to make$70 ,000,$80 ,000 a year. And what's the path there and the things I have to do that are uncomfortable to get me there that are ethical but they're uncomfortable?

50:48Dave Ramsey:It's not stuff I enjoy as much as I do the actual teaching of a personal trainer. Or I'm going to hire some people or I'm going to open a gym or I'm going to – I don't care. But decide what it is and then decide if that price is when you want to pay to get there. because right now you're the CEO, the chief everything officer. And that's what you got to decide. And then I'm also going to send you our latest business book, my latest bestseller actually, Build a Business You Love, because you're at the first stage of the five stages of business called the treadmill stage. And you just run, run, run, run, run, run, run, feel like you get nowhere.

51:22Dave Ramsey:And sometimes it's because you're getting nowhere. And I remember that stage in this business. And it wasn't a fun stage. It was exciting because it was all on me. But you're exhausted at the end of the day and you don't know what you did. It's just chaotic. And so I'll talk you through both of those. So I think you're going to make a good decision either way, because I think you've already decided what we're doing is not working.

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53:41Dave Ramsey:Well, we wish we could get to every call on the show. Sorry, we can't. There's only so many hours in a day and so many phone lines that you can get through on. But if you've got a question about money and you want an answer for your situation, head over to our website at RamseySolutions.com and click on and use Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained only on proven Ramsey content, proven Ramsey principles. So it's going to give you the exact same answer with like three or four years of this show all downloaded into the tool. All of the books we've written downloaded in the tool.

54:18Dave Ramsey:All the thousands of articles on our website about money, from what we think about this or that, downloaded into the tool. So it's going to give you an answer. Might not be quite as snarky or sarcastic as I am, But it might be. You better be careful. We've been trying to add the sarcasm to it, and it's working. So check it all out. Ask Ramsey completely free. Ask your question at RamseySolutions.com or click the link in the description if you're on podcast or YouTube. All right. Ann is with us in Akron, Ohio. Hi, Ann. How are you? I'm doing well, Dave. How about you? Better than I deserve. How can we help?

54:54It's great to have you and Rachel on the line because I have a debate with my husband. and I really need both of your inputs. Yes, we love a debate. Cannot wait to know if you're the winner, but we will tell you. I mean, I feel like I'm the winner, but of course I would say that. You probably are, Anne. You probably are.

55:13Dave Ramsey:We can already tell, yeah. So what's going on? Oh, so we do our monthly budget together and we have a slush fund for stuff like vacation items, you know, just bigger expenses that come along monthly. And then we have money going towards the down payments and that sort of thing. My husband says that our slush fund should be considered spent money. So we put it on the budget as spent money. But I say we should count each individual charge, like for hotel rooms, for food and everything. So what do you guys think? So you're talking about you're setting money aside for Christmas, and when you take it out of the budget, how do you take it out of the budget if you don't show it as spent money?

56:03That's what I was going to say. I was telling him that. So we're going on our honeymoon, which is a year delayed, to Italy, and we are buying, like, hotel rooms and stuff monthly, like we spend for excursions.

56:19Dave Ramsey:You would reduce the savings that you have for the honeymoon.

56:26Dave Ramsey:You've already set the money aside and took it out of the budget to put it in the honeymoon account, correct? I mean, it comes out of a slush fund monthly. Like, whenever we do have the money for an item like that. I don't know. I mean, so you're running all of your savings for different things out of one account? Not for everything. You didn't have a separate honeymoon account that you were saving money into? We don't have a separate honeymoon account, no. Okay, so what is this slush fund then? So the slush fund pretty much are like that appointment can typically come out of there. It's pretty much money set aside for things we know we need to spend our money on, and we just take it out of our checking account into a separate account on the side.

57:18and then that way it doesn't get spent by accident. Not that we would accidentally spend it. Okay, so the question is, when you're booking the hotel this month, is that considered money that should be coming out of this month's income? Is that what you're saying versus the slush fund? And so it looks like it has been spent? Yeah, I know it's kind of confusing.

57:41Dave Ramsey:No, it's not. The way you're doing it is confusing, but it's pretty simple. If you're setting money aside out of your budget, you have your budget, and my budget says I'm setting aside$100 to go into an account that's going to pay for my honeymoon. Okay? That money's already come out of your budget once. Yeah, it doesn't need to come out twice. And then when you spend it, it doesn't need to come out again. Your books aren't going to balance. Yeah, I guess that's true. It can only come out once. And it already came out because it's sitting in the slush fund. Yeah, when you moved it out of your monthly budget into this side, we call them sinking funds in every dollar.

58:19Dave Ramsey:And so if you have a sinking fund for Christmas and every month you set aside$100 for Christmas out of your budget, your budget has already set that money aside and there's$1 ,200 in there for Christmas then. And you get ready to go buy Christmas. You don't take it out of your budget again. You've already been taking it out all year. Does that make sense? Is that answering your question? yeah it does actually because uh you know i was i was always considering it like a monthly expense because sometimes we pull the money out but then we'd have to add it back in it's kind of well i think i think your slush fund is probably in general it's too confusing so what i would say is you don't need sinking funds except for specific things okay a slush fund that picks up five different items is going to be really confusing it's gonna be hard to track it okay So if you do car repairs and vet bills and doctor visits all out of the slush fund, instead of having set money aside for each of those things separately, then you're going to stay confused.

59:24Dave Ramsey:So that's why we have sinking funds. You don't have one fund that covers eight different subjects. But the fund in every dollar is not going to a separate account. No, I know that. So it could all be in that one, quote unquote, what she's calling a slush fund and all her sinking funds. The money can be in that fund, but there needs to be sinking funds established in every dollar for each one. So that when you can look at every dollar and go, okay, for four months we've been putting$100 aside for car repairs. We have a$500 car repair. We only have$400 in the car repair envelope. Then that's a problem.

59:57Dave Ramsey:We've got to move some money around. But if you have a$300 car repair and you've got$400 in your car repair sinking fund, then you're okay. Yeah, but it's all coming out of one large account that she sees. And so it may be that the vet bill is more, you know what I mean? Yeah, well, I wouldn't have a vet bill, such lush fund. I'd just cover that out of my monthly expenses. But I wouldn't be setting that aside. But, I mean, for Christmas, Christmas should be separate than car repairs. They should have different accounting for them. And so that's why we have the different sinking funds. You don't need 42 sinking funds.

1:00:31Dave Ramsey:Most of this needs to be rolled back into your monthly budget and just be a monthly thing. But the answer to your question is if you've already taken it out of your budget once, you can't take it out again when you spend it. That's it. Because you're going to double. And I can't tell who won then. Your books aren't going to balance. And I don't know who was voting for which side, so we still don't know who won. But you know who won. You'll have to go back and figure that part out later. But, yeah, ouch. Brock is in Cincinnati. Hey, Brock, what's up? Hey, how you doing, Dave? Better than I deserve.

1:01:00Dave Ramsey:What's up? My friends can tell me that I'm not doing this correctly. So if I could pay my house off within five years, but it means I'm not investing quite 15%, should I stay on this trajectory or should I follow the baby? How much, what percentage would you be investing? Roughly 9 % to 10%. Okay, so 5 % off, and your income is what? 90K. Okay, so talking about$5 ,000 for five years, we're talking about$25 ,000. So it doesn't extend the time you pay off your house, but about six months. okay you're not making as much headway by doing this as you think you are okay so no i would put 15 of my income in okay so you're saying bump it up and just follow the steps quite literally then right yeah absolutely quite literally yeah that's a great phrase I was going to tell you.

1:02:00Dave Ramsey:That's a great phrase. Yeah. We did not give you a range in baby step four. And the reason, Brock, is this. I've run the math scenarios. I've been doing this 35 years. And I've run the math scenarios out at all income levels. You know, unless you're making a million dollars a year or$10 ,000 a year, I didn't run those out. Okay? But I ran them out$100 ,000,$200 ,000,$50 ,000,$90 ,000, whatever, back and forth. and it doesn't, the big thing is, is that I want a substantial growth in your nest egg in retirement while you're getting the house paid off. And the average person is paying off their home doing this in seven years while putting 15 % away in baby steps four, five, and six.

1:02:40And he said five years.

1:02:42Dave Ramsey:That's the average. Yeah. So he's already better than that. Well, he's better than average because he's not putting in. So he's probably going to be more like six years after I changed this, but that's all. It's really not going to change it that much. And the compound interest of the growth you're missing out on in the market? Yep. Probably worth it.

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1:04:49Dave Ramsey:If your private student loans are in default when you've fallen so far behind the loan is considered unpaid, Y-Refi might be able to help. Y-Refi helps borrowers in tough situations explore low fixed rate refinancing options that fit your budget. Go to Y-Refi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Might not be in all states. Today's question comes from Aaron in Indiana. My wife and I are buying a house and have a couple of questions. Should I insure my house for the sale price of the home and upgrade that if the house goes up in value? Also, should I reduce the amount of home insurance once I get to baby step seven?

1:05:34Excuse me. Sorry, I have a cold.

1:05:38Dave Ramsey:Okay. No, you don't insure the entire house because it includes the lot, and the insurance company won't let you if they're smart because they're going to look at the house and look at the appraisal value of the house in the area and at least come close on a guess on it. And so what does it take to build your home today on a vacant lot that looks like your lot? That is what would be left if the house burned and you'd have to build it with a builder. and so that is the amount you would insure what it takes to replace the house on that lot yeah and no i would not reduce the amount of home insurance now the i wouldn't now we haven't none of us have we fully insure homes now i've raised the deductibles considerably on my car and homeowners um and uh um and life insurance is one that you but you could become self-insured eventually.

1:06:37That would be one insurance that you could drop off.

1:06:39Dave Ramsey:If you've got enough money that your spouse and kids are okay, if there's kids at home, without life insurance, then you're self-insured by becoming debt-free and having a pile of money. So that's a baby step seven thing. You can get rid of life insurance. I kept my life insurance for quite a few years after that, but not for any financial planning reason. It was just Sharon wants it swi and some things are just swi sharon wants it and it wasn't that expensive um and so i kept it for a few years and then a few years ago she said i don't want it anymore so i think i'm going to be okay i think you were okay a long time ago but anyway because all of our state plan is predicated on me dying first so that's the that's the assumption uh no but the but the home insurance even if you could pay for the home that like you it would not yeah would not reduce it i've got i've got expensive cars and i don't fully insure self-insure the cars now again i carry a massive deductible which brings the premium way down yeah way down but and the same thing on my home i've got a massive deductible because you know let's say pretend that you're living in a a two million dollar house okay i'll just make up a number if you got a fifty thousand dollar deductible that's not going to kill you but the two million might if the thing burns so i mean that'll that'll take a chunk out right so if you want super low uh premiums you can run your deductibles up but i don't just cancel the insurance no i haven't i carry it on my cars i carry not only liability but i carry replacement value and i will also tell you to say when it comes to homeowners insurance to go with stated value where you state the amount and then as the cost of building that house goes up over the years on that lot building that same house back raise your stated value you need to review your homeowners and your car insurance once a year i've got stated values on my cars and so if the car is totaled this is how much i get i don't don't have to negotiate.

1:08:49Dave Ramsey:This is the amount. It's a set amount. Not going to get more, not going to get less. It's preset. No negotiation. Well, the car is depreciated. The radio didn't work. I'm not getting into all that. The car is either totaled or it's not. Write me a check or don't or fix the car. One of the two. And so stated value. And that has helped a lot, again, with expensive automobiles. And so you want to look at that. And I run a very, very high deductible. and with stated value, it change it and update it. I just finished my review with Xander on my whole package last week, as a matter of fact. And so I'm just looking at the car values, how we change them, the how on values, where we reset them and everything, because it does not automatically adjust.

1:09:30Dave Ramsey:Replacement value is no longer a thing with most insurance. Most insurance, it's the amount you state, and you want to make sure you keep that adjusted. Josh is in Tampa. Hey, Josh, what's up? Hey, Dave. It was a pleasure talking to you. You too. How can we help? Hey, so I just really wanted to ask. I'm trying to understand maybe it's me or not. I'm trying to understand if I'm too frugal in my marriage. Or should I ask my wife to get a higher-paying job? I'm trying to tread lightly here. What about Josh? Does he need a higher-paying job? Yeah, no, absolutely. You're absolutely correct. So I think, you know, for me, I always try to find the cheapest possible things that we can afford certain things, because I feel like that's the only thing that we could afford.

1:10:22Every time I, you know, I say book a trip or shop for things, I always look at the cheapest, cheapest possible things. And I can almost feel the tension with my wife, like, oh, not again. And I just want to preface this with I just recently became debt free. And that's literally after paying 10 years of credit cards and loans. What is your household income, Josh? So together we make around$105 ,000 a year.

1:10:56Dave Ramsey:Okay. And so on$105 ,000, you have to cheap out on everything to exist. No, you don't. Right. So I've calculated every single dollar that I could get. And I feel like at the end of the week, I have about$300 to spend. See, there's a lot of feeling going on, and math doesn't have feelings. That's the third time you said, I feel like, which tells me you're not doing a detailed written budget that you and your wife are agreeing on on every dollar. No, no, we did it together, and she sees it. However, I don't think it sort of clicks in her head. Like, no, we can make it work. Every dollar, when the two of you finish every dollar with$105 ,000 and no debt,$105 ,000 income, you have$300 left.

1:11:47Every week, yes. Every week. And that's money that's also being contributed towards our 401k, our Roth IRA. It's also obviously paying the groceries, the house, and at the end of the week. Do you guys bring home, what,$75? $500,$8 ,000 a month? Yeah, so I, together, we probably bring in around, yeah, you're right,$7 ,000 a month after taxes and all that. How much is your mortgage payment? $2 ,000 a month. Okay. And then our groceries is our biggest expense at$800.

1:12:31Dave Ramsey:Okay, well, there's a couple things going on, okay? Yeah. You have a tendency to be cheap. That's nothing wrong with that. My wife has that same tendency, okay? That's not a bad thing, all right? But what you're saying is your wife has not joined you emotionally in the Every Dollar Budget Committee meeting once a month, and the two of us as adults look at this and say, we have X to spend on groceries. We have Y to spend on travel. We have Z to spend. And you don't make$500 ,000 a year. You make$100 ,000 a year. So it is going to run out. But you also don't make$40 ,000 either. So, you know, you're above an average household income in America.

1:13:16Yeah, so if you have$800 for groceries a month, and I don't know who does the grocery shopping, Josh, but, yeah, if you're going in your nickel and dime in every single little thing and you're getting the cheapest of the cheap and all of this, and then you guys still have money left over in that category, then that means you can up some of the quality of the stuff you're buying. So you just have to like.

1:13:37Dave Ramsey:You have$800 to spend. Yes. Not$500,$800. Yep, exactly. So spend the$800 on groceries. And then when you guys are planning a trip, you guys need to decide together what hotel you're staying at. That is within the budget that you set for the trip. That's right. Yes. Yes. So yeah, it's probably a both and, Josh. You probably do need to chill out a little bit. But also, you know, you guys have$5 ,000 after your mortgage is paid to say, how are we going to live our lives with this? And so it is important to know where it's going. But, yeah, you should have more. I would think more than$300 after all the debts paid.

1:14:12Dave Ramsey:It's not your job to cheap everything out. It's the two of you's job to decide how much we're going to spend on a category and then live within that category. If it means cheaping some of it, fine.

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1:16:02Dave Ramsey:Adam is in Albuquerque, New Mexico. Hi, Adam. How are you? Pretty good. How are you doing? Better than I deserve. What's up? Well, I kind of have a crazy one for you. I'm thinking about selling my house and buying a van and doing the van life thing. The van life thing. What does that mean? You're going to live in a van? Down by the river? Adam, where are you going? Yeah, it sounds crazy at the surface, I understand. I'm 33, single, no debt besides my mortgage, and I work fully remote. And I previously worked in construction and lived in RVs and traveled, and that's where I saved the most amount of money in my life is when I did that.

1:16:45And now I have a house, and I feel like all I do is spend my money. It's about a little over 40 % of my take-home pay. How much do you make a year, did you say? 135. 135, okay.

1:16:59Dave Ramsey:Well, 40 % of your take-on pay we're not going to recommend, but I don't know if that justifies a van. I mean, that's a pretty extreme swing from that.

1:17:12Dave Ramsey:So you just travel around living in the van, working remote? Yes, sir, yeah. Okay. Campground to campground, I take it, right? uh blm land there's some things you can do for free there's some things you can do where it's paid um okay do you know how long are you thinking do you have a time frame or are you just you're not tethered down to anything specific so you're just like i just want to see what happens no i'm not not tethered down i originally bought this house uh to be close to family but i ended up just sitting here working my remote job and you know not really wanting to be in the area, kind of want to get back out on the road and travel and see things.

1:17:54I feel like I've followed the Ramsey plan fairly well.

1:17:59Dave Ramsey:Except for that 40 % of your take-home pay house payment. Yes, sir. Yes, sir. I hear that one in my brain every day. And then I also hear, you know, if I sell my house and buy a depreciating asset, I also hear that in my brain every day. So if you do the van thing, the answer to your question is, regardless of, it's cool, it sounds fun, it sounds like an adventure. It's not a good 10-year plan. No, no, no. It's not a bad two - or three-year plan. And if you save that much money and put it aside, by the time you're done with everything, to be able to put roots down somewhere. You're 33 and single, and we're pretty much ensuring you're going to stay single.

1:18:42Dave Ramsey:If you're going to live in a van. You could say that. I would say it's more of like a five-year or less plan. Listen, there's some women who love being in there, too. I don't know. Your chances just went way down on that. That's debatable. No, it's not. You cut out 75 % of the female population that want to live in a van. Well, maybe that 25 % are the good ones left out there. There you go. You need a good van girl. That's what you need. That's fun. I like you. You're a lot of fun. All right. Now, yes, I would sell it. And yes, I would do it. What I would do is put a time limit on it so it doesn't become some kind of weird way of life.

1:19:26Dave Ramsey:You don't want to be 63 and still doing this. Right, right. That's not good for you career-wise. It's not good for you socially. It's not good for you financially because of what you said. You're in a depreciating versus an appreciating asset. all those kinds of things. But if you did this for a period of time while you're untethered and don't have responsibilities and it's fun for you, I did hear you're a rambling man. I mean, you like the road, you know? And I think that's cool. That's fun. Go do it. Go do it. Yes, I would go do it, but put a time limit on it. And make sure you are saving. It's the same kind of mindset.

1:20:05People go and move back home to save money, and then they really don't even end up saving money because they just end up spending it. So really make sure. I've saved up to this point, right? I've got over$300 ,000 in retirement, and then I also have about 90 cash sitting there ready to go. Okay, well, you may have just plugged it back in 25 % of the female population.

1:20:26Dave Ramsey:Yeah, your bachelor eligibility just went up again. Okay. That's great. That's great. That's good to hear. Oh, man, I was going to ask him how much a van costs like that. I think he's going to be okay. Junior's in Fayetteville, Arkansas. Hi, Junior. What's up? Hey, how are you doing? Better than I deserve. How can I help? Well, I have a considerable amount of money that I'm investing. And I have a friend that's a financial advisor. And he's given me some mutual funds to invest in to purchase. And he's not charging me. And my question is, is it okay to go with him and just bank the 1 % that typically they charge, like a Fidelity or E-Trade?

1:21:09or would I get a better return if I went with E-Trade and somebody was actually watching over it?

1:21:16Dave Ramsey:Well, I would not go with E-Trade because I would want you to develop a personal relationship with a financial advisor that is watching over everything and meeting with you like our Smart Investor Pros that we recommend. But we don't recommend E-Trade and we don't recommend Fidelity. Fidelity is not a bad company. They've got some good mutual funds. But I want you to sit with a financial advisor, and I don't mind them charging you a percentage. You will recoup on that. So what's the total amount you're investing? I have, like, in my individual account, I have about 619. I have some RSUs that are going to mature.

1:21:55I'm going to sell them in about two weeks. That's 276. Then I have a 401K that's 47.

1:22:02Dave Ramsey:So you're bumping up to a million dollars. Yeah, yeah, over a million, but 1.2. Yeah, okay. And I think when you sit with some of the financial advisors, there's breakpoints on that as well when you start getting up to that million-dollar mark, meaning that the commissions won't stay exactly the same. So, yeah, I would sit down with Smart Investor Pro and have somebody talk you through that. You can find them at RamseySolutions.com. But the data is this. DIY, do-it-yourself investing, does not yield the same rates of return. And the main reason is that you get enamored with the romance of some company or some particular stock or thing instead of just looking at cold, hard numbers.

1:22:52Dave Ramsey:The second reason is fear. and when you read the wrong headline on the Fox News or CNN website and it triggers your fear button and you start talking about pulling all your money out at usually the exact wrong time to do it, you need someone to talk you off the ledge. And so all the research that we have on investing says that a person who has a calm, conservative, trusted voice in their ear to stay in the market and to carefully analyze these investments rather than getting caught up in the Internet romance bull crap of something, then they're going to keep you on track, and you're going to build more wealth over the scope of your life than when you DIY it.

1:23:38Dave Ramsey:And so I know a lot about this stuff, and I don't DIY my mutual funds. I have a SmartVestor Pro. Rachel and Winston have a SmartVestor Pro. I don't know if the friend was doing it out of just goodwill. I think he's just saying pick this fund and this fund. I don't think he's actually managing it. Okay, okay. He said he's showing me which mutual fund. Oh, I gotcha. Yeah. And not charging him for that. But there's more in this than just simply which mutual fund to pick. There's staying in it. There's understanding new things that come on board, different things you can get into. as you get above that million dollar mark, there's going to be some things that you can do that are very nuanced, very small things are not going to make you rich, but they're also going to stabilize your life and stabilize your future with that.

1:24:27Dave Ramsey:So no, Junior, I would not go with E-Trade. I would not go with Fidelity and I would not go with my free friend who told me which mutual fund to buy over lunch. Instead, I would do what I do. So my advice is consistent. I'm not telling you to do something I don't personally do. My personal accounts are with a, one of our SmartVestor Pros and have been since I started that program all these years ago. Yeah. And these, and these guys and women who are in this position, it for, if you find a good one in our SmartVestor Pros, you know, for sure that is they live and breathe this stuff. And again, there are nuances in that world that you can take advantage of that you will never get by just, yeah, doing it yourself.

1:25:08And when you have that much money, Junior, that I would. I mean, I know we joked about like tax loss harvesting, you know, one time on the show. But it's these little things that you, you know what I mean, that add up over time. And they know about that stuff and they can educate you and show you. And it's good for you. Take advantage of those things. But you're not going to get that with just someone randomly telling you to pick two or three different types of mutual funds and that's it. So there's some nuance to it and detail that I think can be to your advantage for sure.

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1:27:06Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Rachel Cruz, Ramsey personality, and my daughter is my co-host today. So a few months ago, we had another caller named Rachel that reached out asking if she could do a once-in-a-lifetime opportunity to see her childhood friends. There was a lot of drama in the question. Can you tell? She wanted to go see the Backstreet Boys at the, what do you call the stupid thing? The Sphere. The Sphere. I couldn't make it come out of my brain. I couldn't drop it out of my brain. Okay. At the Sphere. And it's not drama. She was drama. No, it was all true and real.

1:27:44Dave Ramsey:It was her personal friends. To the heart of all millennial women. in the world. My personal friends. Yes. The Backstreet Boys. Well, she obviously knew our answer. We're not going to tell you. We told her, you know, we understand. Rachel particularly understood and empathized. I had no sympathy whatsoever. And just no. And then Rachel's like, oh, but I understand. Well, it turns out Kevin with the Backstreet Boys. What a good man. Was listening. A friend sent him the clip. Yeah. Oh, that's what it was. Yeah. And he got in touch with us through uh dms i guess it was and uh mine are yours or somebody's and uh means that somebody was watching my dms because i don't i don't even know what that means other than there's a way to message anyways okay tell the story so he offered to send rachel to the backstreet boys so we got him on the air with rachel call her rachel call her rachel and um And then we were going to pay for the hotel.

1:28:46Dave Ramsey:So she had no net cost. And she got to go do the dream because Kevin was so generous. And it was great. We had him on the air, her on the air. So fun. Yes. So she just got in touch with us. Apparently she went the other night. Yes. I think it was last week. And sent us all the pictures and the VIP backstage experience. And Kevin gave her a shout out from the stage. She said, my childhood friend on her shirt. Backstreet Boys are my childhood friends. there they go good very cool and she had a great time and she wanted to send a huge thank you to out to kevin the backstreet boys for hosting rachel and for giving her this once in a lifetime opportunity that's pretty cool so fun it was a fun thing to get to hook up somebody with uh super famous and super generous people like those guys very awesome very neat amber is in atlanta Hi, Amber.

1:29:38Dave Ramsey:How are you? Hey, Dave. Hey, Rachel. I'm good. How are y 'all? Better than we deserve. What's up? Perfect. So my husband and I have been on our debt-free journey for about 18 months. Good. We've paid off$45 ,000. Wow. Way to go. We worked really hard, and we're both really proud of the progress that we've made because we've always been just paycheck to paycheck, nose to the ground working, trying to make ends meet. And we have been married for 21 years. And so for that time, that's kind of how we've always lived. So we decided last year after they get our church, we're going to get our lives together.

1:30:20We're going to become debt free. And I know that you always talk about the Bible verse of not being a slave to the lender. And so that's kind of what I keep in the forefront of my mind. So my question is, my husband and I, over the last year and a half, his income has doubled.

1:30:38Dave Ramsey:Wow. And, yeah, he changed jobs about six months before we decided to work on our debt-free journey. And so it's been such a blessing, and God has truly blessed us through that journey. Amen. So we have our house left, which is about$190 ,000, and I have$28 ,000 left in student loan debt. But the journey is getting weary. So my question is, how do we keep lifestyle creeps from getting out of control while staying focused on our debt-free journey? You tap back into the exact same spiritual nobility that caused you to do this in the first place. something happened at church and god spoke to your minds and said you guys need to straighten up because you're not doing this right and you said you're right lord you're right lord and we're gonna not be slave to the lender anymore and you went after 21 years of doing it wrong a new dog learned new tricks an old dog learned new tricks that's for sure yeah right and uh and so you you're a completely different couple and completely different people than you were 36 months ago that's worth it yeah and so you know yes you're weary but yes you're that 28 000 is going to go as fast or faster than super fast because the 45 000 was in the early days of the thing and now you see it working but you just got one left and you're looking up that hill and you're going it's a steep hill and I'm tired, but you just reach down inside and you say, all right, this is what the Lord gave us to do.

1:32:23Dave Ramsey:And this is what, it's changed our lives because it's changed our whole mindset. How do you, how do you feel different, Amber, with the 45 paid off versus the 28? I can't believe it. Yeah. I can't believe we actually did that because I didn't even realize it was that much until I sat down the other day and we kind of hit mid-year and I was like, okay, I need to do a checkup and see where we are, how everything's looking, you know, what is the rest of our year look like kind of thing. And what are what are we aiming for for the next six months? And as I added it all up, I was like, oh, my gosh, it was gone way further.

1:33:04OK, so and I would want you to know that like as it's going, do you know what I mean? Like if you have a great month and you guys put an extra$800,$1 ,000 more to the debt than what you had planned out, that should be the energy boost to keep you going. You know what I mean? I'm thankful that you guys got further than you thought, but I don't want that to be a surprise. I would be in your numbers probably a little bit more so that you know the end too, Amber. You feel the progress. And you need to know like, hey, we're going to put an extra three grand towards this debt. You know what I mean? and we're going to be done in 10 months.

1:33:39Dave Ramsey:We've got a saying on the wall back here that says, what got us here won't take us there. Oh, that's good. I like that. And in my 40s and 50s, I ran 15 half marathons, which are 13.8 miles. Okay? And oddly enough, there's this thing in the half marathon world that happens at 9 1⁄2 miles. And at that point, you've been running well over an hour. and at the nine and a half mile mark your your uh your nutrition starts to run thin your hydration starts to run thin and you're certainly not running on any sugar high or excitement high you're just trying to finish now and so you're looking you're going it feels like that the next three miles of that three and a half miles is going to be longer than the first nine is there something that happens and it's a mental thing and like i said i've done 15 of them back in the day and i remember every time i hit that nine and a half i was like oh crap why do i do this you know right this is this is killing me and but you're already 75 done you know and you but you're still your mind starts playing tricks with you and that's all it is so here's the thing i think you guys are way better and way stronger than you think you are well thank you for that because one day we're going to make it to where we get to come do our debt-free screen.

1:35:03Dave Ramsey:You are, and you're going to stand on the debt-free stage right outside this window, and you're going to remind me of this conversation because we got your back, kiddo. Yeah, and Amber, you guys are doing exactly right. I mean, on average, it takes people 18 to 24 months. So you're about to, you are doing it. You're doing it. If God told you to do this, it's okay to ask him for the strength. It's okay to pray and say, Lord, I need some extra boost right now. As a matter of fact, he kind of enjoys that.

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1:36:48Dave Ramsey:Are you sick and tired of being sick and tired with your money? You ready to get it under control? Work so hard. Don't seem to get any progress? Feel like a rat in a wheel? Debt hanging over you? You sick of MasterCard? Yeah, I bet. Hey, you don't have to live that way. Our EveryDollarBudget app will help you find extra money every month and build you a personalized Ramsey plan to get out of debt so that you can build wealth. In just 15, the first 15 minutes, you're going to find thousands of dollars in hidden margin. It always happens. You're going to feel like you've got a raise. Don't be normal.

1:37:24Dave Ramsey:Normal sucks. You want to be a whole new plan, every detail under control. Check out EveryDollar. It's free in the App Store or Google Play. Renee is in Boston. Hi, Renee. What's up? Hi. Thank you so much for taking my call. I'm a single parent researching the best ways to pay for college. I have two sons. My older son went into the trades, a.k.a. no college debt. My youngest son is starting his freshman year at a private college in New York in a couple of weeks. The good news is— Where did you get the money for a private college? We have$72 ,000 in need-based scholarship. Okay. Is it$72 ,000 or is it more?

1:38:15No, it's$72 ,000, which leaves me to pay$14 ,000 per year.

1:38:22Dave Ramsey:Of what?

1:38:26Tuition.

1:38:27Dave Ramsey:Oh, I thought it was$72 ,000. So the tuition at the private school is$86 ,000 a year? More than that. Okay. I think it's$93 ,000. Okay. And what, pray tell, is this young man studying that's worth$100 ,000 a year? Yeah, but they gave us$72 ,000. I know. In need-based scholarships, which means I only have to pay back$14 ,000. What do you make? I gross$113 ,000. Okay. Can you just pay$14 out of pocket then? That's what I'm thinking about doing, paying$14 out of pocket. Okay. Then you really don't have a question if you just do that. That's okay.

1:39:24Dave Ramsey:And it sounds like it's what you're going to do. What I will tell you from our research is, and we had an award-winning documentary called Borrowed Future on Student Loan Debt, which you're not talking about student loans. But what we found is the biggest mistake people make in college is the school they choose. Okay? Now, I don't know if you can find a school that's only$14 ,000 out of your pocket somewhere else, or if this guy, does he have great grades, or is it 100 % based on needs, with you making$115 ,000 a year? I can't imagine the need of that. He has great grades, and he was recruited by the football coach.

1:40:11Oh, so he'll be playing? Yes. Oh, okay. So there's an athletic component to it.

1:40:18Dave Ramsey:Well, sort of. You said it's need-based. Yes, it has to be need-based because it's a Division III school. Okay, gotcha. And again, he's studying what you told me, but I already forgot. Economics. Okay, okay, cool. All right, so if you can do this and he can play football for four years and you can come out of pocket$14 ,000 a year and you can cover that and cash flow it for four years and he gets a degree for the equivalent of$60 ,000 out of pocket, then that's not going to be a bad deal, right? Yeah, that's what I think. Yeah. but if he could have gotten 100 free ride somewhere else 100 nothing out of pocket then i'm going to argue nothing i'm aware of yeah well you didn't try he got recruited from one place and you went where they called you that but and because they gave you a big old number but it wasn't a big enough number so yeah the the philosophical thing if i were you i would do the deal okay but the philosophical thing i want to lay out there for you and more importantly for all of our tens of millions of listeners is that where you go to school does not matter okay no one has a you know you go in to see your doctor you don't ask him where he went to school you go in to hire a lawyer you don't ask him where they went to school you go in and sit down with an economist you don't say where'd you go to school unless they got a PhD from freaking Harvard and then somebody will bring it up it's like they're vegetarian they feel like they have to tell you you know so but other than that it's not a thing right so you other than that it's not a thing so you just don't go somewhere just because and don't go somewhere by default but it sounds like this deal's not super bad but if you told me you were coming out of pocket 40 grand yeah you wouldn't be able to afford it I'd be resetting his whole expectation about where he goes to school.

1:42:17Dave Ramsey:I'd say go to school somewhere that you can afford to pay cash for. Or at the beginning of August. Or if you came out of pocket, or if you told me you're going in student loan debt to do this, I would just say, no, there's another way to do it. And you can go to a different school and you can afford it. By the way, folks, the average in-state tuition in America today is$14 ,000. That's what she's paying out of her pocket. So all the free money that they gave her just brought the cost down to what the average state tuition is. Now, maybe not in New York. She's in New York. I'm not sure that state tuition will be true in New York.

1:42:52Dave Ramsey:But I don't know who all offers in-state tuition in New York. It's a state college. But I'm going to guess and say that one's higher than the average. But still, you cannot justify coming out of pocket$100 ,000 a year for a school that you could get virtually the same curriculum and the same textbooks in a lot of cases by going to a state school. 78 % of the CEOs of publicly traded Fortune 500 companies went to a state school. where you go to school does not matter. Whether you go to class or play beer pong matters. Whether you learn something while you're there matters. Whether you study something like economics that's usable in the marketplace, that matters.

1:43:50Dave Ramsey:And so this is a sharp young guy, obviously. And so the good news is she's got the money to cover the 14. The 14 is not unreasonable. and you know as long as they don't rescind the scholarship but if they rescind these scholarships or these things you know and he gets hurt playing football then he's going to a different school if he's mine yeah because we're not coming out of pocket 50 grand so you can finish up where they started me with a pretty debatable topic but even college sports at a three you know i mean a school it's it's not like it's sec and football right like that you have a full time the only reason needs it's just a job football's a job you have a full time it's a 72 000 a year job that's it totally that's what i was gonna say is at that point you are going uh because they're paying for for your well and then they take that team and they go play a big school and that school pays them a million dollars for beating the crap out of them yeah that that's what happens so that's where it comes from but that's true oh man oh yeah hey well what's crazy too it's not his deal is not a bad deal sure totally always look always look at lots of options and don't just set the thing up on based on where you're going to school it's the number one mathematical mistake in the whole college equipment whole college uh decision making paradigm yeah well average tuition i just looked it was twelve thousand dollars room and board is thirteen to fifteen thousand yeah you're starting to pay more for room and board than the actual tuition tuition they're gonna they're gonna price themselves out of the market if they keep it up.

1:45:23Dave Ramsey:It's wild. Like she said, she got one, went in the trades, he's going to end up making more than the economist. Right. Yeah. The diesel mechanic will make more than the economist. We're done here. That's what's going to happen. 120 a year diesel mechanic right now. So, yeah. Sounds like Renee's a good mom. She's got two boys she's raised, both of them coming out. They're both productive. Well done, Renee. Very cool. Good for you, Renee. And I hope it goes well. I do too. I hope he doesn't get injured. I hope it, and he loves it. Yeah. Hope it all works out perfect. If it doesn't, pull him, though.

1:45:54Dave Ramsey:Put him in a school you can afford.

1:46:38Dave Ramsey:Hey, guys. Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com.

1:47:26Dave Ramsey:Dennis is in Denver. Hi, Dennis. How are you? Hey, Dave and Rachel. Thank you for taking my call. Doing well. How about yourself? Better than I deserve. What's up? Awesome. So I'm 24 years old. I have about$170 ,000 in a regular savings account. I'm embarrassed to say that, but that's what it is for now. My question is, my mother is currently renting a home. She has been renting the house for quite some time, about five years now. She doesn't own a home herself, and the home is worth about$180 ,000. I could cash flow it and have her pay rent. She's the one encouraging me to do this, to build some equity over time and also have some income from the rent that she'll be paying me.

1:48:12I'm wondering if that's a wise decision to make.

1:48:17Dave Ramsey:Where'd you get$170 ,000 at 24? I've been working since I was 16, and to be honest with you, I just have accumulated that much. Over the years, I take home about$3 ,900 a month, and I have no debt, no payments at all, no car payment. And I also don't pay for housing as a benefit to my employer. What do you do? I'm a property manager for a ski resort. Okay. Wow. Well, you've done really well, sir. Well done. Congratulations. Very well done. Thank you. How old is your mom? She's 60, and she's looking to live in that current house for five to seven more years before she retires and goes back to her home country.

1:49:05At least that's what she says. Yeah. But it's unknown. Okay. Is it a house nearby? Is it in Denver? No, actually, it's in the outskirts of Houston, Texas. Yeah. Okay.

1:49:17Dave Ramsey:Okay. What's her home country? Just curious. Honduras. Okay, cool. Doesn't affect the answer. I was just curious. So I think your mom wanting you to own a piece of real estate at 24 that's going up in value is a good idea. I think renting to relatives is a really, really, really bad idea. and I think owning rental real estate in a town you don't live in is a bad idea. Okay. So this is going to go sideways. Something's going to happen. Somebody's going to get sick. Something's going to shift. You're going to get married. Your new wife's not going to like the arrangement. Something's going to happen somewhere.

1:50:03Dave Ramsey:I would rather if your mom needs some help through those years, which it doesn't sound like she does, she's paying her rent now and she's working and when she when she retires she's going to leave and go to Honduras so she's probably in pretty good shape after all she raised you and you're pretty frugal so I'm guessing she's probably doing a pretty decent job but anyway I would just live your life with your 170 and if you need for some reason to you know if you want to help your mom at some point with some cash that's fine but I don't think this is the best way to help your mom and it's not the best way to help you.

1:50:41Right. And she doesn't need the help at all.

1:50:44Dave Ramsey:She just is encouraging me. She just thought it'd be a good idea. She just wants you to own real estate. And it's something going up in value. She wants to pay her son. She'd rather be paying you than a landlord. Like, I understand how she got here. It's just when you look at all the facts, it's probably not the best route. When the heat and air goes out and it's$8 ,000 next year, you've got a problem. You know, and when this or that happens, you got a problem. And by the way, you're supposed to go up on the rent every year when you're a landlord. That's how it works. And that's your mom. Well, he wouldn't do that for five years.

1:51:15I know.

1:51:16Dave Ramsey:I know. And so you're not getting the right rate of return on your$770 ,000. So you're not going to go up on the rent. And you should. But you can't because it's mom. You can't because it's mom. Not his sweet mom is going to be retiring in five years. That's right. She needs to just rent and then execute her plan. He needs to execute his plan. That's right. I agree. Keep it separate, Dennis. But I understand how she and you thought maybe this could be a good idea. But at the end of the day, probably not the best. Sitting in this seat for 35 years, I can tell you that very few people have called up and go, oh, that really changed everything except in bad ways.

1:51:53Dave Ramsey:And so... If anything, Dennis, I would recommend you put your 170 or part of it, half of it, into the market. You could be making more return on that. That is one thing I would say is do something with that money you have saved. All sitting and checking is not good. That's right. That's right. Yeah. So you need to move some of it somewhere and start thinking about where you want to live. Yeah. You got free housing right now, so that's okay. Yeah. But I would park the vast majority of that in at least an S &P 500 or sit down with a Smart Investor Pro and let them help you develop a game plan for investing that.

1:52:27Dave Ramsey:Because the crazy thing, y 'all, not just him, but everybody else. Just think about this, okay? In 2023, the market went up, the S &P, Standard & Poor's 500, which is the 500 largest stocks, and you can buy that in a mutual fund, went up 26%. In 2024, it went up 25%. In 2025, it went up 18%. Year-to-date in 26, it's up over 10%. And we're not even at the end of the year yet. Okay? Or you can get 3.5 % on a high-yield savings account. So basically, had you been invested, if you're out there and you've been invested for those four years, you would have doubled your money. And by the way, I have some money sitting in an S &P.

1:53:15Dave Ramsey:That's where I park money while I'm waiting to buy a piece of real estate. And so during that five-year period of time, the money that I've got sitting in there doubled. That's crazy, y 'all. So like if it's a million dollars, you got$2 million, that kind of thing. If it's$170, you got$340. Now, the market does not always do that. That's an unusually good four-year period of time. But that's a lot, y 'all. That's crazy. And so, yeah, just leaving money in a fruit jar in the backyard buried because it's, quote, safe, no, it's not. Because you're getting beat up out here by inflation. So you need to be investing at a rate that's higher than taxes and inflation, which is higher than 6 % on your long-term investing.

1:54:05Dave Ramsey:Because you've got to cover taxes and inflation. Inflation runs about 4.2, and then you're going to have income taxes some kind on that money somewhere. So when you've got money like he's got sitting there, be Rachel's point, get it to where it's working for you. Andrew is in Tampa. Hi, Andrew. What's up? Well, I've got an interesting problem. I am cruelly blessed. I'm in a very strong financial position, but you've got me getting, I guess, anxiety because I burnt through my baby step three. I had a couple of very large ticket recent expenses that fortunately, you know, I had that fund. I was able to pay it.

1:54:46And so, you know, just not having – I'm super cash poor right now, but I just wanted to know your opinion on borrowing against a 401K since I can pay it back to myself with interest at roughly the rate that the market's moving.

1:55:02Dave Ramsey:No, it's not the rate the market's moving. It's more like 5 % or 6%.

1:55:09Dave Ramsey:You don't pay yourself back on 401K loans at market rate. You mean the market on a high-yield savings account maybe, but not the market on what the S &P 500 is doing? No. That program is not available. But anyway, the answer is no. I would never borrow on a 401K under any circumstances. The only time I would take or use 401K money is to avoid a foreclosure or bankruptcy. You're nowhere near that. How much money did you have in your emergency fund? uh well going back to covet i had quite a bit but i used that to buy a business and uh i now own four locations and that's doing real well and i'm keeping all of that money separate to continue to grow that business how much money is in that business so uh how much money is in the business how much money are you say you said i'm keeping all that money how much is in there uh it makes about 300 000 a year good and all that money's just sitting there in retained earnings uh well No, I've used it to buy properties and open additional shops.

1:56:08Dave Ramsey:Okay. How much cash is sitting in there right now? In the business account, about$180 right now. Okay. And how much was your emergency fund recently until you had these unexpected big purchases? It was about$100 ,000. Why'd you have$100 ,000 in your emergency fund? Three to six months of expenses should be in your emergency fund. you don't have three to six months of$100 ,000. Okay, so I'd take some of your$180 ,000, maybe$30 ,000 or$40 ,000 or whatever, three to six months of expenses and move it over there, set it in your emergency fund and call it a day.

1:57:05Thank you.

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1:58:03Dave Ramsey:Our scripture of the day, Psalm 37, 23 and 24. The Lord makes firm the steps of the one who delights in him. Though he may stumble, he will not fall, for the Lord upholds him with his hand. John Maxwell says a man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them. Woo, that's good. Michaela is in Philadelphia. Hi, Michaela, how are you? I'm good. How are you guys doing? Better than we deserve. What's up? I'm calling because I'm wondering what it means to be a beneficiary on a will, and if that person who is the holder of the will, if they pass away, does the beneficiary inherit any debt?

1:58:45Okay.

1:58:46Dave Ramsey:The second answer is no. The first answer is there's not really anything called a beneficiary. There's an heir. You can name an heir. Okay. You can name who you're going to leave money to. You can name, you can take a, there's certain kinds of things like your 401k. You can put a beneficiary on that. Life insurance has a beneficiary on it. An annuity can have a beneficiary on it, but a will technically doesn't use that term. It would be more that you're just the heir or the person that has willed the money. A will also has, and this may be what you're talking about, I'm not sure, they will assign someone to manage the affairs of the estate and follow the directions of the will, and that's called the executor of the will.

1:59:31Dave Ramsey:Is that what you're thinking of? i think so whose will are we talking about this is my grandmother's will okay and she's just if she's simply leaving you money it's that simple okay okay the executor as the word implies executes executors execute the terms of the will so if the will says you get five thousand dollars of grandmother's money your cousin gets three thousand dollars or grandmother's money, your mother gets that piece of land, your brother-in-law gets that piece of jewelry or Bible or whatever, then the executor's job is to do what the will says and execute that and give you that money, your sister that money, your brother-in-law, whatever, all that stuff, right?

2:00:17Dave Ramsey:It's their job to do that. But in no case does the debt get assumed by the person. Now, if there's something like a house that has a mortgage on it. Okay. The executor would sell the house and whatever the net is would be distributed to the people in the will. Okay. But you do not, and if they die and they don't have enough money to cover all of their debts, the person in the will will get nothing. Yes. Because the debts have to be paid before money's distributed. Gotcha. Okay. But in no case are you suddenly going to have debt on you because your grandmother had a mortgage. Okay. But now let me make it, you know, that's the law.

2:01:06Dave Ramsey:Now, if, let me go a step further, just to make this even more complicated, but let's say your granny had a house that she owed$100 ,000 on, and the house is worth a half million dollars, okay? She dies and she leaves you the house. Now, you have inherited a house that has a mortgage, but you're not on the mortgage. If you want to keep the house, you're going to pay the mortgage because they're going to take the house. But you're not on the mortgage. They're not going to report it on your credit report. They're not going to sue you if they foreclose. There's no change in the documentation. How about the deed?

2:01:43Dave Ramsey:The deed can go into your name, but you don't owe the mortgage. Okay. But if you want to keep the thing, or if she leaves you a car and it's got a car loan on it, if you want to keep the car, you're going to pay the debt. Okay. But you're not technically on the debt. Like if she left$50 ,000 in credit card debt, you don't just get the$50 ,000 in debt. Debt is not inherited. Okay. Is that logical? Yes. Very. Thank you. Okay. Hope I didn't give you too much. No, you're good. Just throwing everything at you, one thing. So, folks, when someone dies, to make it simple, what you own when you die stands good for what you owe.

2:02:27Dave Ramsey:so only your net worth after all debts are paid can be distributed to your heirs and so it's like you know i sometimes i run into people who are kind of um they don't know how this stuff works it's like my grandmother left me a car but the bank took it well no your grandmother left you a car with a debt on it and you didn't pay the debt that's why the bank took it it wasn't the bank didn't do anything wrong they that's why they have a lien on the car title so they get their dadgum money but um so but if if someone is uh penniless they're they're a pauper they live in an apartment they don't own a piece of real estate uh they're um and they got sixty thousand dollars in debt and forty thousand dollars or sixty thousand dollars in credit card debt and forty thousand dollars in student loan debt and there's they don't own anything of value and they die, that debt is not inherited by their heirs.

2:03:25Dave Ramsey:That debt is just simply lost. The company that loaned them that money loses the money. Student loan doesn't get paid. The credit cards don't get paid. And so if that's your father that passes away as a pauper is what we would call it, poor, you would just get copies of the death certificate and send it to Citibank and say you get nothing, honey, because he died with no money and nobody paying this. But you don't get to keep his car and not pay the credit card debt either, because what you own stands good for what you owe when you die. Jacob's in Salt Lake City. Hi, Jacob. How are you? I'm doing great.

2:04:07How are you guys doing?

2:04:08Dave Ramsey:Better than we deserve. What's up? yeah i had a question about um qualified hsa funding distributions are they a good idea in terms of of of working your money with a traditional ira in a smart way the only thing i've used hsa hsas for in that way is i fully fund mine every year and i've never used it and I've got it invested in mutual funds. And so it's become a third type of retirement savings. But I don't move it around. I haven't done qualified distributions. I haven't done anything. If I had a big medical event and didn't have the money, I could pull that money out of there. But I got several hundred thousand dollars in an HSA because I started it the first year George W.

2:04:54Dave Ramsey:Bush started it. And I fully funded it every single year. And when it got above$100 ,000, I put it in the mutual funds. I'm like, actually, I think there's more like a half million in there now. But anyway, doesn't matter. A lot of money in there. And so it becomes, but only after you're at baby step seven do you do that kind of stuff. Don't be putting money loading up that thing and not paying off your house. That make sense? Yeah, it does make sense. I just have a traditional IRA that is not really doing anything. It's from a previous employer. I haven't rolled it over or anything like that.

2:05:29and I wanted to see if transferring some of that money into my HSA would be a good idea.

2:05:35Dave Ramsey:No, you don't need that money in your HSA. No, you want to keep that as an IRA. Roll it from there into a traditional IRA into a good mutual fund that's doing something. Get a good SmartVestor Pro to help you with that. We don't use the HSA instead of IRAs. No, IRAs are much more flexible. A lot more things you can do with them than you can with the HSA. But, by the way, sidebar, if you do— From a tax perspective, the HSA. Do what? From a tax perspective, the HSA is great. It grows just like their traditional IRA. And it's pre-tax that goes in too. Yeah. You don't, yeah, you avoid. So it's like a traditional.

2:06:11You avoid double taxes.

2:06:12Dave Ramsey:It's like, no, you get double taxed. If you don't use it for medical, you get taxed. Not at the end, at retirement. Yeah. Yeah, when you pull the HSA out at 65 and you start using it for retirement money, you pay income tax on it. Yeah. Just like a traditional 401. Why did I feel like the growth was tax-free in HSA? It's tax-free if you use it for medical. No. You buy a Tylenol, they're zero taxes. But you can't. She gets some Mucinex after the show. It's a lot of Tylenol. With my HSA. Yeah. But your HSA, I mean, but you've got a big old traditional lump sum sitting there, and there's not anything you can do with it except that.

2:06:47Dave Ramsey:But no, I wouldn't put more money in there than that, and I wouldn't do any of that until So that's a baby step seven and beyond type of strategy where you've maxed out 401ks, mega Roths, mega backdoor, everything. You know, mega 401ks, everything. It's all going into Roth. You can't do anything else. And I think, okay, here's a little bit more money. I can keep the government's hand off. Yeah, and again, you can't get to it. Well, unless for medical, right, until retirement. 65, yeah. So it's stuck in there again. I can get mine, but I don't need it. I'm just going to let it sit there and grow.

2:07:19Dave Ramsey:Just let it sit there and grow. That's what it's for. It never was intended to be used by me. It was just keeping the government's stinking hands off my stinking money. That puts us out of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

2:07:50you